The evolution of Technical Analysis

[kut2k2]

Has TA evolved?

Absolutely. Without question.

How has TA evolved?

As with biological evolution, it has been by fits and starts. The widely held fictional notion of gradual evolution from primitive to advanced simply doesn't apply. The latter is the new-car model of evolution where each new yearly model has some improvement over the previous year. In TA things can stay unchanged for years and years then suddenly some new indicator or some new technique comes along that has the potential to change everything if only it is properly developed.

Look at it this way. Your grandfather's car from the Fifties or the Sixties will still get you from point A to point B. But will it do so as speedily, as comfortably, as efficiently as a much later model car? Of course not. TA fails for many traders because they're still trying to make the ancient stuff work. Some really good stuff has come along in the meantime that is largely ignored. If TA doesn't work for you, it may be as simple as finding better TA that is already free for the taking.

 

[radex78]

Often I am trying to analyze trend market based on chat pattern combine with price action, but if use indciator I like use bolinger band and stochastic, most decision only look on chart pattern with use various timefarme

 

[m1nt]

The markets are driven exclusively by central banks nowadays. The markets change directions on a dime based on esoteric gibberish, vague innuendos, mumblings in an elevator at a foreign CB, a phone call from Yellen... The next step in trading evolution will be a top notch lie analysis application applied to a trading algo. Then the extent of lies measured will be matched with incoming volume, the news, and the goal-seeked outcome of the lier/s to determine whether a trade should be entered.

How someone extrapolates traditional TA to make a trading decision beyond a day or two out is just beyond me. The Fed trade (when it starts to look ugly, look for the Fed to come out guns blazing, heavy liquidity from seemingly nowhere, fake numbers, a G20 joint PR push...) is pretty good though.

But then this isn't really my argument. Sorry.

 

[Sergio77]

HFT is the new technical analysis.

 

[SunTrader]

TA is the door knob.

But first you need the right map, then choose the right path, good down the right last road up to the right door and finally have the right key to unlock it before you can - turn that knob and enter.

 

[Xela]

What do you think, how did the technical analysis change? What trends are out of date, and what methods do you use so far? What helps you to make an effective market solution now?

You ask good questions.

And - deservedly - there are some really good answers above, too (notably, as ever, from Handle, Kut2k2 and WRBtrader).

Personally, I use many of the non-indicator parts of TA, and have found them increasingly helpful over the years. I'm very much a TA trader, but I gave up indicators altogether when I eventually, gradually learned that the fewer indicators I used, the better I did, overall. I strongly suspect (but can't prove, of course) that this will make my trading methods more "timeless" and robust. Just my perspective ...

By the way, for those interested in the evolution of Technical Analysis, and perhaps especially for those more interested in indicators than I am, Paul Ciana's book New Frontiers in Technical Analysis: Effective Tools and Strategies for Trading and Investing makes very interesting reading. He's a senior technical analyst with Bloomberg.

 

[Jamie J.]

You ask good questions.

And - deservedly - there are some really good answers above, too (notably, as ever, from Handle, Kut2k2 and WRBtrader).

Personally, I use many of the non-indicator parts of TA, and have found them increasingly helpful over the years. I'm very much a TA trader, but I gave up indicators altogether when I eventually, gradually learned that the fewer indicators I used, the better I did, overall. I strongly suspect (but can't prove, of course) that this will make my trading methods more "timeless" and robust. Just my perspective ...

By the way, for those interested in the evolution of Technical Analysis, and perhaps especially for those more interested in indicators than I am, Paul Ciana's book New Frontiers in Technical Analysis: Effective Tools and Strategies for Trading and Investing makes very interesting reading. He's a senior technical analyst with Bloomberg.

Thank you very much. I really appreciate each written post. And you are right there is a lot of great and useful answers here. It makes me happy to learn such new things.

 

[Jamie J.]

I do not know about the current trends in TA (and frankly I do not care).

I use only trend-lines with candlesticks bars.

Whole classical and candlestick patterns imho useless. Indicators imho useless as well. What's left?

"Everything should be made as simpe as possible , but not simpler. " (A. Einstein)

So do you think that using a TA is a useless occupation?

 

[Jamie J.]

HFT is the new technical analysis.

And can you tell us more about this?

 

[qxr1011]

So do you think that using a TA is a useless occupation?

absolutely not, quite the opposite

support and resistance lines imho are as valid as ever

trend-lines work as well

there are definitely some new developments in the TA, we just do not know about them , things like that are not discussed, it is not a public knowledge

so if one wants to learn about the new trends in TA, he should first invent them...